A question from one of my blog readers
Can Boston condo association prevent condo owners from renting their condo?
Simple answer yes.
Investors have been snapping up growing numbers of Boston condos amid one of the hottest housing markets in living memory. Now, condominium associations are fighting back, rewriting their rules to try and prevent investors from buying Boston condos in their condo complex.
Some Boston condominium associations are reportedly concerned that a rise in condos acquired by investors could lead to a decline in property maintenance, making their building complex less desirable. They also say investor activity prevents needy young professionals from becoming homeowners.
Homeowner associations believe they have the power to stop investors from grabbing too many Boston condos in their condominium complex. As such, some housing groups are attempting to cap the number of homes that can be rented out in a neighborhood. They may require rental tenants to be approved by the association’s board.
One such move was taken in Walkertown, N.C., where the Whitehall Village Master Homeowner Association is trying to amend its rules to require that new buyers live in a home or they must leave it vacant for six months before they can rent it out. That would prevent investors from purchasing any more homes in the neighborhood.
“They’re coming in and they’re basically bullying people out with cash offers,” Chase Berrier, the association’s president, told The Wall Street Journal about the movement.
Trying to capture the hot housing market, investors have increased their buying activity. Single-family rentals have become a huge growth area, too. More than one in five home sales in December 2021 were investor purchases, according to CoreLogic housing data.
As more Boston condo complex associations take steps to try to ban renters, investors aren’t happy. The homeowner associations’ actions also are attracting lawmakers’ attention in many states as they debate how much power homeowner associations should have in limiting renters in their neighborhoods.
“The only real purpose of restricting rentals in a given community is to keep renters out, actions which in our view are both harmful and dangerous,” David Howard, executive director of the National Rental Home Council, told The Wall Street Journal.
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This is an email that I received this morning. Does anyone have any suggestions for my blog reader?
I’m just curious if your brokers/clients on both the sell and buy side have been encountering financing difficulties when trying to buy condos in associations with commercial interests. I’m currently trying to refinance my condo in the Back Bay but because a commercial unit has a 38% interest in the assocation, I essentially can’t find a lender willing to refinance. Freddie and Fannie Mae have policies against purchasing a loan in which the commercial space is greater than 20% interest in the condo association. Have you found any local lenders willing to supply financing in such situations? Is this a wide spread problem in Boston?